Prelude

Around the same time as Singapore, Malaysia looked into and developed an IT plan of its own. But this was no "me to" plan. Malaysia developed their own homegrown plan to become the center of e-commerce in Asia. Malaysia has not been known as a technology power house in the world nor does it enjoy the same international coverage as Singapore gets. But Malaysia, despite it's critics, has put up one of the best plans and efforts, of any country in Asia.

Malaysia, like many other countries in Asia, was hit hard by the Asian economic crisis a few years ago. While Asia suffered, the US boomed with stories about Internet this and Internet that and how everyone is getting rich. It's about this time that I heard about Malaysia's efforts. Like most, I was wondering what kind of effort Malaysia could muster, known for producing rubber. Dr. Mahathir, Malaysia's leader, decided to make this his lasting legacy and has aggressively moved Malaysia into the information age with a bang!

The Strategy

Malaysia has created what it calls, the Multimedia Super Corridor project. Its physical dimensions are 15 kilometers wide and 50 kilometers long. Huge lines connecting this area to the global communications network. Plus Malaysia has created two new cities for this corridor, unlike anything ever seen in this part of the world and probably anywhere!

The two cities in the corridor are Putrajaya and Cyberjaya. Putrajaya will be the new seat of government where concepts in cyber government will be created. Cyberjaya is the real jewel of this corridor. Planned to support 240,000 people, 500 IT company and fully completed by 2020, Cyberjaya may be the role model of the future city. Everything is fiber optically connected to the net, land prices are cheap, a balance of residential, commercial, public facilities and shopping areas, make Cyberjaya a balanced city. With incentives for companies to set up shop, this city is already returning dividends to Malaysia. Company's like Microsoft and Sun are already setting up shop there with more planning to.

Fancy cities are not the only thing up Malaysia's sleeve. Recently, the First Finance Minister announced that certain VC investments into e-commerce ventures would be tax exempted for the life of the project or 10 years, which ever comes first. A sum of RM25.17 million will be provided for programs promoting science and technology in addition to the Development of Industrial Technology Action Plan to encourage the use of new technology and upgrade innovative capabilities, inventions and commercialize homegrown technology and marketing them abroad. Under the Mid-Term Review of the 7th Malaysia Plan, a sum of RM1.07 billion has been allocated for the implementation of the 4 MSC (Multimedia Super Corridor) flagships, that is, E-Government, smart schools, telemedicine and smart card. According to International Data Corp (IDC), the e-commerce market in Malaysia this year is expected to be worth RM175 million, and would grow to RM5.9 billion over the next 3 years.

Malaysia has a very well rounded heterogeneous society, Indians, Chinese, Malay and westerners all live together and English is well known and education standards are high. This mix gives Malaysia a nice advantage. In theory, it should be able to absorb cultures and new technology better and fast than a more homogeneous culture.

Problems

It sounds like Malaysia is well on it's way to taking the crown in e-commerce, but let's look a little closer, beyond the macro level. Only 5% of Malaysia's 20 million people have access to the Internet, and industry experts believe that the critical mass needed for E-Commerce to take off would have to be 35% of the population online. Another problem that these number show is, Malaysia has put a lot of effort into development on the macro level, many companies and consumers are not being reached.

Malaysia's two Internet Service Providers (ISPs), Jaring and TMnet, have been getting complaints from their subscribers for slow access times, lost connections and what they claimed was just an overall poor quality service. Malaysian surfers do not expect the cost of access to come down anytime soon because of the high cost of fixed line access in the country. In addition, there are no provisions or plans in the Budget 2000 that would help lower the cost of Internet access for people. The government, by allowing the high cost for fixed lines is sabotaging it's own efforts. Imagine having to pay for every minute you are online. Now imagine running a website, 24x7, what a cost that would be! But here again is another problem that Malaysia needs face. Fixed line cost must go down, charge for time online should be taken away and let consumer use the Internet for a fixed monthly cost. This has been a big reason why the Internet has taken off in the US more than in any other country around the world.

Another problem for Malaysia comes from its double-edged sword called; it's ethnic and cultural mix. Malaysia's native Malay controls the countries political system, with Indians and Chinese in many places of power in business. Some from the Chinese and Indian population feel they are being left behind with preferential treatment given to native Malay. This could create a very damaging brain drain on the knowledge economy of Malaysia. A likely scenario could give tip the advantage to Singapore. Malaysian Chinese and Indians feeling left behind, move to Singapore to fill the brain drain there. Higher wages and standard of living would lure these workers there.